The retail scene in India is currently undergoing a “sea change” with the emergence of scores of

modern retailing malls, stores and multiplexes all over the country instead of the earlier
dominance of millions of mom-and-pop stores and retail is the fastest-growing sector of the
Indian economy. This change is clearly visible in Indian rural market also. Over the past few
years, the rural markets have emerged as one of the most lucrative markets for Indian companies.
The large rural population of the country has also drawn the attention of modern retailers as it
accounts for over one-third of the market for most durable and non-durable products. This
scenario definitely opens up an opportunity for retailers with an innovative retail proposition .In
this context it would be desirable to have a review on some select retail models in India by ITC's
Choupal Sagar, Hariyali Kisaan Bazaar, 3A Bazzar and Tata Kisan Sansar. The purpose of this
paper is to analyze the various strategies employed by these retailers to capture Indian rural
market.
Definition and evolution of Rural Marketing
Census of India (2001) defines rural as any habitation with a population density less than 400 per
sq. km, where at least 75 percent of the male working population is engaged in agriculture and
where there exists no municipality, cantonment board or a notified town area committee.
According to Gopalaswamy (2005) Rural Marketing is a two way marketing process which
encompasses the discharge of business activities that direct the flow of goods from urban to rural
areas (for manufactured goods) and vice versa(for agricultural produce) as also with in the rural
areas where as National Commission on Agriculture defines rural marketing as a process which
starts with a decision to produce a saleable farm commodity and involves all aspects of market
structure or system, functional and institutional, based on technical and economic considerations,
and includes pre-and –post harvest operations, assembling, grading, storage, transportation and
distribution. 
It was in the late 1960s and 1970s that rural marketing became a topic of general discussion.
There are two schools of thought among Indian marketers on rural marketing. The first school
believed that products and marketing techniques which worked in metro and urban areas could
be transplanted with little or no modification to rural India. But the more sophisticated marketers
quickly perceiving the difference between town and country inaugurated the second school : the
belief that rural marketing required radically different skills and techniques from its urban
counterpart .
The Green Revolution and the consequent pockets of rural prosperity that appeared on its wake
awakened many manufacturers to the new purchasing power and it has been identified that rural
marketing is a specialized field of the marketing discipline which encompasses a customized
application of the marketing tools and strategies to understand the psyche of the rural consumer
in terms of needs, tailoring the products to meet such needs and effectively delivering them to
enable a profitable exchange of goods and services to and from the rural market.
Significance of rural marketing
“The rural consumer is discerning and the rural market is vibrant. At the current rate of growth of
rate, it will soon outstrip the urban market. The rural market is no longer sleeping but we are”
- Adi Godrej, chairman, Godrej group
The above statement itself can speak a lot about the significance of rural market .The
potentiality of rural markets is said to be like a 'woken up sleeping giant'. Rural areas in India are
increasingly becoming reflective of a growing purchasing parity, changing consumption patterns,
increased access to information and communication technology, improving infrastructure and
increased government initiatives to boost the rural economy. These facts are substantiated in a
study of market growth conducted by various researches. Rural markets in India constitute a
wide and untapped market offers a huge opportunity for many products and services that MNCs
cannot afford to ignore. With 128 million households, the rural population is nearly three times
the urban. The rural markets are estimated to grow fast compared to the urban markets. Rural
market is at a cusp and today stands at where this whole nation stood two decades back and it
lives and behaves very differently from urban India, and thus the rural consumer has his own
peculiar needs and demands While urban areas will constitute the fastest-growing part of the
Indian market, rural areas currently hold 70 percent of India’s population and have historically
accounted for more than half of Indian consumption. Even with increasing urbanization and
migration, 63 percent of India’s population will still live in rural areas in 2025. Thus, the rural
market has been, and will remain, vitally important to the Indian economy. Rural consumption
will have nearly tripled by 2025, creating a large potential market worth over 26 trillion Indian
rupees ($577 billion). In the next 20 years the rural Indian market will be almost four times the
size of today’s urban Indian market. (Source: McKinsey)
To expand the market by tapping the countryside, more and more MNCs are foraying into India's
rural markets. Among those that have made some headway are Hindustan Lever, Coca-Cola, LG
Electronics, Britannia, HDFC Standard Life, Philips, Colgate Palmolive and the foreign-invested
telecom companies.
Rural Retailing
Organized retail has given a strong boost to rural India by lifting farm incomes and enhancing
the linkages between urban and rural India. Rural regions provide a highly unexplored market for
the expansion of retail activity. The BMI India Retail Report for the third-quarter of 2010,
forecasts that the total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion
by 2014. With the expanding middle and upper class consumer base, there will also be
opportunities in India's tier II and III cities and according to industry experts, the next phase of
growth is expected to come from rural markets..A study by Confederation of Indian Industry
(CII) and Yes Bank identifies that Retail opportunity in Indian villages and hamlets is set to
reach $58 billion by 2015, and India's rural markets are growing at double the rate of urban
markets. The total number of rural households is expected to rise from 135 million in 2001-02 to
153 million in 2009-10, giving a tremendous push to rural retail opportunity," Technopak
estimates that the size of the Indian retail market is at present around USD 300 billion with the
rural-urban split in the ratio 55 – 45. The total size of rural market for FMCG products is
Rs.41550.00 as compared to Rs.371330 crores in urban areas.Rural market share for consumer
durables market is 59% of the total.An analysis of the rural market share for about 35FMCG
&consumer Durables product shows that rural market share is higher in about 20 of them. But
Issues like poor infrastructure, supply chain inefficiencies and competitive pricing in the rural
markets are the main challenges in tapping an otherwise large consumer base.
In rural India Haats, mobile traders and village shops form the traditional retail network. The
government has also established some good rural retail networks such as Public Distribution
System, Khadi and Village Industries Commission (KVIC) and Indian Farmers Fertilizer CO-
operative Limited (IFFCO). Post liberalization, a few corporates have taken initiatives to set up
organized retail formats in rural .In this rural retail initiative ITC has enjoyed its first movers
advantage by setting up the country’s first rural mall ‘Choupal Sagar’ offering a diverse product
range from FMCG to electronics appliance to automobiles, attempting to provide farmers a one-
stop destination for all of their needs. Other corporate bodies involved in this battle include DCM
Sriram Group with ‘Hariyali Bazaar’, Escorts, Tata Chemicals (Tata Kisan Sansar), Future
Group’s Adhaar etc.
The next section looks at some proven innovative models which are being used by select
retailers:
ITC’s Choupal Sagar
The pioneering efforts towards the establishment of rural malls came from the tobacco to
hospitality giant ITC. As a logical extension of its highly lauded e-Choupal project, the company
launched rural malls under the banner “Choupal Sagar”. ITC has launched the first rural mall-
Choupal Sagar at Rafiqganj that is a little village about four kilometers from Sehore town in
Madhya Pradesh in August 2004. It is located on an eight- acre plot with a shopping area of
7000sqft with a godown of 10,000 tonne grain capacity. The idea behind the choupal sagar is to
create a multipurpose destination for the farmer where he can sell his produce, buy quality
products for farm and household consumption along with his family. The farmer, with his
family, can drive into Chaupal Sagar in a tractor trolley laden with the produce from his field, he
proposes to sell. After weighing his grain on the digital weighing machine, he is supposed to
unload it at a huge godown at the back of the mall. Meanwhile, his kids can enjoy the swings and
video games and his wife may like to move around and get her requirements from the racks
bursting with both consumables and durables like FMCG products, clothes(trousers at Rs.166 a
pair tailored for rural people), sewing machines, watches, grinders, TVs, DVD players, pressure
cookers etc. As soon as the farmer gets his cash, they make the required purchases and drive
back by evening. If they wish they can have their lunch in the cafeteria. If he intends to, he can
even carry fertilizers and pesticides and get a diesel fill for his tractor. This rural mall also
provides farmers the invaluable additional services like soil testing, banking, insurance, medical
facilities - Doctor and a basic diagnostic laboratory besides selling tractors, threshers and motor
pumps,” says ITC agri-input head Sanjiv Sharma. The samyojak at the Sagar is in charge of
storage, transportation and other logistics, and management of bridge financing.
For the sustainability of this model it has already welcomed and tied up with well known
organizations like Marico, Eicher, TVS, LG, Philips, Everyday, ICICI Prudential, LIC and
Apollo Hospitals. The company has also created its own method of reaching out to rural
customers through interactive games, competitions and melas. Choupal Mahotsav is a mela
which is one of its kinds in the rural India. Choupal Mahotsav is a three day mela targeted
towards farmers within 25km catchment of the Choupal Saagar.ITC had partnered with Impact
Communications, Delhi to launch this mega event in UP during the months of March and April
2010.During these three days farmers and their families were provided opportunities to gain
information, shop and entertain themselves at the Choupal Saagars.
Hitherto ITC had set up 24 Choupal Saagars over the last 6 years since the first Choupal Saagar
opened in 2004 and the company is engaged in scaling up the rural retailing initiative to establish
a chain of 100 Choupal Saagars in the near future.

Source : http://www.outlookindia.com/article.aspx?232470
Hariyali Kisaan Bazaar

Source : http://www.hariyalinet.com/
The concept of Hariyali grew from an agricultural extension programme of DSCL, a well-known
Indian conglomerate producing fertilizer, seed and sugar. “Hariyali” means “Greenery” in Hindi
and it signifies “Prosperity in Agriculture” where as “Kisaan Bazaar” means “Farmer’s market”.
Through this venture the company has created one stop shops offering everything from sickles to
technical advice as a forward integration strategy. Hariyali Kisaan Bazaar rural retail is a first of
its kind initiative with a focus on agri-products and merchandise mix spreading across garments,
footwear, home appliances etc. It has been leveraging the relationships through "all under one
roof" retailing and direct sourcing of quality farm produce. The first Hariyali Kisan Bazaar
(HKB) came in 2002 at Western Uttar Pradesh. At present, Hariyali Kisaan Bazaar has 302
outlets spread over Uttar Pradesh, Haryana, Punjab, Rajasthan, Chhattisgarh, Madhya Pradesh,
Maharashtra and Andhra Pradesh. The company owns 85 of them, while the remaining are
franchisees. According to Ajay Shriram chairman and senior managing director, DSCL Each
store caters to residents of around 25 - 30 km and supplies inputs to agricultural land of about
60,000-80,000 acre. Besides agricultural input the stores also sell fertilizers, pesticides, consumer
durables, FMCG, life insurance, health insurance and fuels. Recently the stores have started the
procurement and sale of milk too.The company has recruited over 1,000 agricultural graduates to
assist farmers for the betterment of their farm produce. Dedicated agronomists in each store
ensure the critical delivery of agri-advice to the farmers and adoption of appropriate modern
farming practices. IT has been a critical backbone to the chain of centres. It is being used to
provide online support on latest technical advancements, weather forecasts, mandi (market)
prices, fair & transparent billing to farmers as well as in maintaining extensive farmer databases
with micro information about the farmers' field to provide customized service to the farmers. As
per company sources on an average each HKB has 400 walk-ins per day with 70-80% repeat
visitors. The revenue from Hariyali stores has gone up to Rs 471.5 crore during April-December
of 2009-10, registering 42 per cent growth year-on-year.
3A Bazzar

Source : http://www.3abazaar.com/
3A Bazaar is India’s first mobile retail company which was launched in early 2007 with a
puchline “Aapka Bazzar Aapke Dwar. The company is owned by the Paramount Trading Corp
Pvt Ltd, an exporter of metal handicrafts and primarily operates in the Jyotiba Phule Nagar
district of Uttar Pradesh in Northern India. The company is the brainchild of Mr. Asad Shamsi,
who was inspired by a few similar retail chains in Europe. In the first phase company has started
its operations with 5 mobile vans in JP Nagar. Each van operates in villages with population of
less than 10 thousand people. Each van is assigned a different route and covers 1.00 Lac to 1.25
Lacs of Rural consumers. From consumer point 3A Bazaar enhances their saving by minimizing
the transit cost which they spend regularly on purchasing the basic necessary products. 3A
Bazaar makes life convenient for consumers who have to travel 20-30 kms and spend Rs 30-40
to buy petty products. From FMCG companies point of view 3A Bazaar acts as bridge between
these companies and the rural consumers. It helps these companies to reach the interiors of India
where consumers have access to communications media but not the products thus automatically
increasing consumer base for these companies.3A bazaar offers its rural customers all the
products needed under one roof which means a complete solution to its customers’
needs. Through this initiative 3A Bazzar offers different products like grocery, Staples, toys,
personal care, health products, confectionery, color and cosmetics, household items and
stationery etc to its target audience. Beside this 3A Bazaar is planning to work for rural
enlistment and empowerment by different activities like providing technical expertise to farmers,
provide information on education, enhance the savings and organizing health camps.

Mahindra Shubhlabh Services Ltd (MSSL)

Source : http://www.agritv.net
Shubh Labh is a rural subsidiary initiative of the USD 2.6 billion Mahindra Group, which is the
largest farm equipment company in the country. MSSL has revolutionized agribusiness by
aggregating the factors of production under the brand Mahindra Krishi Vihar through farming
solutions specific to crop, region and market. It provides a complete range of products and
services to improve farm productivity and also establishes market linkages to optimize the
commodity supply chain. The staff provides support and guidance to the farmers in the selection
and usage of products in terms of crop health and environmental and human safety. It also offers
a platform for banking institutions to provide loans to farmers with minimum documentation,
quick sanctions and attractive interest rates.

Key factors of the success

Rural organized retailers are changing the way Indian rural consumers shop. The concept of
“Bottom of the pyramid “marketing can be highly appreciated in this context. It can be analyzed
from the above case studies that through their retail initiatives they are bringing prosperity into
the lives of rural consumers. The following are the unique selling propositions contributed to the
success of above discussed retailers.
 Many of these malls act as a two way supply chain – offload their agricultural produce
and buy the necessary agri-inputs with the availability of expert opinion under one roof.
 Farmers benefit from more accurate weighing, faster processing time, fair price, prompt
payment and access of wide range of information like market trends, accurate market
price knowledge, weather forecasting etc.
 Provision of value added services like farmer training centre, medical facilities,
restaurant, banking and insurance etc. enhance the brand value of these outlets.
 The infrastructure facilities provided by these retailers creates a whole new shopping
experience to the villagers by availing an opportunity to have a business cum family
outing.
 The strategy of partnering with several leading companies and exporters to supply high
quality products at affordable price has made these retailers popular among rural
customers.
 In nutshell, all these retailers can be considered as the combination of convenience,
discounted prices and good quality, coupled with attractive gifts.  
The Road Ahead
The organized retail formats are offering good quality branded products and the value added
services for the villagers and also such rural retailing ventures can take on some of the
burden of the Government, like public distribution, primary health care etc and could be part
of an organization's Corporate Social Responsibility. And finally it can be concluded that a
company can easily succeed in the rural market if all the efforts are directed towards the
correct formulation and implementation of marketing strategies which provides maximum
value to the rural consumers.